So, there’s lots of information floating around the place about Covid-19, and in particular, a lot of misinformation. Shall we clear some of it up?
(Disclaimer: Correct at time of going to press…..)
Can a Director be furloughed?
The answer is yes, they can. On the understanding that they do no work whatsoever for the company. General admin work is just about ok, and we’re talking about answering the odd email, filing the odd legal bit of paperwork. Please don’t tell me that you’ve furloughed yourself, but are still driving around in your vehicle, ‘keeping your hand in’. I can guarantee, that’s not ‘in the spirit’ of the guidance, and will be frowned upon. At the very least.
Is the Self Employment grant repayable?
The simple answer is no, it isn’t. But it is taxable income, and this should be noted when you are invited to claim. It’s there to basically compensate for loss of income due to the Covid-19 situation. But, if you think that you can do without it, then please do consider whether a claim is relevant to you, given that you’ll have to pay tax on it.
Getting your 2019-20 tax return done early will increase your claim?
No. It won’t. The self employment grant is based upon the three years up to and including the 2018-19 tax return, so 2016-17, 2017-18 and 2018-19. If you started your business in 2018-19, then HMRC will count that year as the basis for your claim. Unfortunately, if you started your business in the 2019-20 year, then you cannot claim.
Just as an aside to this, it’s always good to make sure that your tax return is completed nice and early, it just won’t help you in this particular scenario.
The self employment grant is based on your drawings.
No, it isn’t. It’s based upon your profit figure, not your drawings. Your profit is calculated as your sales, less any expenses relevant to your business. Your drawings are the amount of money that you’ve taken out of the business that are commonly referred to as wages.
(Note: they’re not wages if you’re self employed, but that’s a soapbox for another day).
Will I have to contact HMRC to claim?
No, you won’t. HMRC have taken the initiative here, and are writing to all who qualify. Just fill in the paperwork when it plops through your letterbox (the early thing works here too), and off you go.
Am I entitled to the Business rates relief grant?
This depends. If you’re working from home, then no, you’re not.
The grant is available to those who have commercial premises. If you rent an office, for example, and either pay business rates, or have a nil business rates liability, then you will be entitled to the grant, which is currently £10,000. It’s aimed at business who have commercial premises, to assist with the day to day overheads whilst trade is slower, or indeed, non-existent. If you haven’t yet heard from your local authority, then do please contact them.
For more Covid-19 information, check out the Government website.